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The core use of enterprise resource planning (ERP) systems is shifting in the retail space as customer behaviour forces firms towards a data-led model, according to Andrew Lloyd, NetSuite's general manager for commerce products.
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Lloyd said where retailers once used ERP to keep track of their internal business processes, it's now more important to use these systems to have a single view of the business to better serve the customer.
"Customer experience is becoming more important and the role of ERP is really changing," Lloyd said, speaking at the SuiteWorld 2016 conference in San Jose, in May 2016.
"ERP is moving from something that's a primary system that you employed to run your business to a system that needs to be designed and implemented in a way that allows you to serve your customers better."
Customer demand means accurate data
The omni-channel environment has allowed customers to expect retailers to provide a seamless experience.
Customers want retailers to know who they are. They want their experience to look and feel the same regardless of the channel. Moreover, consumers will often interact with a brand through several different channels in a single shopping journey.
Lloyd said ERP and financial management systems at one time were locked away as a back-end function of the business for employees to access, while systems that handled customer transactions were kept quite separate.
However, as customers interact through software-based methods, such as websites and mobile applications, it is no longer valid to separate these systems.
This is driving the importance of "truthful and accurate" data across a retailer's systems, and end-to-end data on where products are across a retailer's business remain vitally important. All this means systems need to properly interact with each other instead of standing in silos.
"The systems that you build on top of ERP are the places where your customers actually interact. For those interaction touch points it's critical that they be built on truthful and accurate information, because your customers are interacting with them," said Lloyd.
"If you're presenting inaccurate information, they're going to have frustrating experiences and your business is going to underperform."
Building the IT platform for change
As retailers adapt to the increased control that consumers have over brands, companies are beginning to orient themselves around customer demands, instead of presenting brands and experiences customers are not asking for.
"The operational efficiency continues to be critically important, as you need to have an efficient supply chain to run your business," said Lloyd.
"But the truth is that customer experience has become far more important because you're not going to be able to compete simply based upon having products that another retailer doesn't have."
Retailers' IT teams will be seeing a shift away from solely catering to employee needs towards ensuring systems are durable, can interact with each other and are capable of scalability, according to Lloyd.
Many retailers are left with legacy systems, as their previous ERP networks or retail management system which ran the back-end have been subject to "bolt-ons" as firms adopted e-commerce and m-commerce initiatives.
"The problem with that situation is that those systems with which the customers are interacting are not actually built on a single version of the truth," said Lloyd.
To ensure retailers have a single view of "the truth", Lloyd suggested implementing a system, such as NetSuite OneWorld, which allows integration of front- and back-end retail systems for data transparency, ensuring a better customer experience through real-time visible data.
A dying breed
Lloyd said retail space is currently in a state of "punctuated equilibrium" whereby its evolution is happening in alternating periods of rapid change and stabilisation.
"One of the things we've seen since the internet came along is this idea of extinction," he said.
"Retail has seen lots of those extinctions. The first wave were driven by companies that were competing based upon something that wasn't sustainable in the cloud era."
Lloyd used the example of small stores with a lack of product range or competitive pricing, which could not compete with the variety and global offering of the internet.
"When the web came along, all of a sudden any product (and its price) anywhere in the world was visible. Consumers are smart, they're not going to buy a product from the local store for 25% more unless that's the only choice that they have," he said.
The introduction of online marketplaces such as Amazon started the evolution, and customers expecting a seamless experience in the new omni-channel era possibly driving the next wave of extinctions, unless retailers focus on customer needs.
"Nobody knows what's coming next, because the customer is always changing," said Lloyd.